The Officials

Markets felt good this morning but by lunchtime Brent flat price began to feel heavy near $64 and it fell back before regathering and
building up to reach the close at $63.58/bbl. Talking about falling back, just how far can the North Sea physical fall? It was so
strong at $1.13 just on 24 April but a deluge of Midland offerings in the North Sea window has tanked it to -48c yesterday, as little
to no buying interest has materialised to absorb those cargoes – though it rebounded slightly to -32.5c today. ‘The North Sea
market is very long,’ said an Asian buyer whose company is going into turnarounds. And the North Sea is long despite loads of
Midland cargoes going East. ‘Some of the Midland sales make no sense but the buyers want to show something to Mr Trump.
These purchases also affect Murban as buyers of Midland cut other competing grades. And don’t forget there’s a lot of Forties
floating about since Grangemouth closed, around 6 extra cargoes a month. No wonder Forties has set the Dated benchmark
recently… But today no sooner had the window opened than Gunvor, Aramco, BP and Unipec all charged in to offer Midland.
Aramco tried to tempt buyers with a 30 May-3 June Midland offered at Dated +$1.15 and offers for 2-6 June at $1.40 over Dated
and 4-8 June at Dated +$1.50. BP offered similarly, while Gunvor also offered an 11-15 June cargo at Dated +$1.45.

‘I am bullish,’ said a large Asian trader. He noted most OPEC producers are already and have been at near max and the market has been absorbing the over quota oil. Another trader was also cautiously bullish looking at $65 if not higher. We are also thinking that the tariff negotiations between China and the US are a sign of price strength as the market oversold last week. As a new Pope entered the Vatican, the Brent bulls are back in town.

This is a huge deal, folks! A source told The Officials the deal for Shell to acquire BP is progressing and will happen… BP hasn’t had long to reset itself but it’s not going particularly well, if the Q1 financials are to be believed, so it’s a sitting duck for the takeover. Things don’t seem to be plain sailing for Chevron either, as we’ve heard it could cut 20% of its staff! It’s brutal out there, people, take care…

The market doesn’t know which way to go. The post-OPEC meeting dump to $59 was offset by relieved anxieties about a Saudi-led price war with the release of their June OSPs, but that rally has run out of steam and Brent flat price fell to $61.43/bbl by this morning’s close. As Brent waxes and wanes, the front spread has been ebbing and flowing too. After the heavy roll down on expiry, the July/August spread has fallen back to 32c as of this morning, a far cry from the June/July spread’s $1+ level heading into its expiration.

No Gulf is safe! Trump just won’t put down his rubber and pencil and stop renaming these bodies of water. First, he proclaims the Gulf of Mexico as the Gulf of America and now he announces he will switch from using the term Persian Gulf to use instead the Arabian Gulf. While Vance says it’s possible to find a deal to reintegrate Iran into the world economy, we expect this will get right up their nose! National pride is no small thing when it comes to international relations and diplomacy…

While the world’s eyes were on pressure points like Gaza, Ukraine and Taiwan, its attention has been grabbed by Pakistan and India. Both sides have given the impression they wanted to show a quick success or victory, without desire for an extended or protracted conflict. A major conflict between two nuclear powers (sadly the wrong kind of nuclear power) could be disastrous. Of course, India claimed to have hit militant sites, while Pakistan said the strikes killed 26 civilians and that the Indian missile attack was an “act of war.” Pakistan claimed to have shut down five Indian aircraft. Other sources said at least one French jet was shut down. Nerves are frayed and we hope the two sides can keep a lid on things before they escalate.

Trump doubled down on the false assertion that the US doesn’t need Canadian energy – except 5 mil b/d of heavy crude they would have to go and find elsewhere… We can’t wait to see dozens of US refineries run on the power of “friendship” alone! How many times can they cry wolf? Another day, another promise of incoming trade deals. This time, Bessent said trade deals may come as soon as this week… hang on, didn’t they say the same thing last week?

In the week ending May 2nd 2025, Brent and WTI front month futures contracts experienced declines in exchange-traded volumes, each by almost 16%, partly due to long holidays in China. By contrast, the front month contracts for gasoil, heating oil and RBOB jumped; particularly, gasoil stood out with the largest increase by nearly 37%. Meanwhile, the growth in exchange-traded volumes was pronounced in August and September tenors for most of the contracts except for WTI with modest declines.

Mercy from the Saudis! They hiked OSPs to Asia across grades by 20c/bbl – less than the monthly change in the Dubai structure would have implied. The Dubai physical premium averaged $1.645 in May trading, up 26c from the average during April trading, thus implying an OSP increase of around 25c. Given this context, the 20c hike looks rather kind! They need space in the market to place the extra 167 kb/d of Saudi supply coming in June!

Price war? Battle for market share? A crack of the whip? The return to realism? Explanations for OPEC’s decision to consecutively accelerate production cut unwinds have been swirling. The market certainly reacted and the Asian session dropped to $59 on the open and just failed to regain the $60 handle by the close, coming in at $59.96/bbl. In difference to the previous announcement, however, this one was almost baked into the market consensus.

The disruptors! OPEC+ brought forward its meeting to tomorrow! The market didn’t expect that and Brent futures fell to below $61 on the reports. Is it just a coincidence that this puts the meeting on the weekend, outside of trading hours, when any market impact can be tempered? Looks like it to us… announcing a change on the weekend will give the market time to digest the impact and hopefully avoid an overextension in reaction. We’re also hearing reports that delegates are already discussing their decision. To cut to the chase, the cats are fighting and anxious about the consequences of their announcements and collapsing prices.

While on the surface globally crude seems hands off, in Dubai it’s time to flip the script! Gone are the days of early-month caginess and jockeying for position in the physical window. PC and Vitol (and Gunvor) reversed roles and gave us a neck ache. Seller becomes the buyer and the other way around. This’s just a reflection of spread trading. Where you sold one month and bought the other one. Sadly, both Vitol and PC have to play the reverse role when the month expires and rolls into the new one.

Brent rolled… out of bed and fell to the $60 floor! Yesterday afternoon’s pre-expiry selloff brought July Brent down to hover just
above $61 and it dropped on the open this morning. Brent slipped as low as $59.30 around lunchtime but fought to regain the $60
handle and even rose beyond $61.50 by 15:00 BST. A trader said confidently, this is the floor! After the June/July Brent spread was
so strong for so long, the July/August spread that’s now taken the position of prompt spread is languishing near 30c.

The market is gearing up for war, on the oil pricing battlefield. The Officials heard that the Saudis are preparing for a 1-2 year price war, while other reports suggest they are fed up with carrying responsibility for OPEC cuts.
The May DFL sold off pretty aggressively yesterday to dip under 60c and it kept going today, falling to below 40c just after the window. Today’s North Sea window followed much the same pattern as yesterday’s: Exxon and Gunvor came in to offer Midland again, each with a cargo at May 15-19 and May 28-June 1 at +$1 and +$1.55 over Dated, while BP bid for several Johan Sverdrup cargoes. Eni made an appearance for the first time in a while, offering a May 26-28 Forties cargo at Dated +$0.40. A broader selection up for grabs, but no buyers were tempted forth to take advantage of the menu. With such lacklustre buyside interest, the physical diff dropped again to 12c.

We feel like we always open the editorial with “what a month”, but at the moment each month seems to bring more and more excitement in markets. But boy has April been a long month, despite only having 30 days. That’s because it’s been so jam packed with major events and news! Tariffs, geopolitical strife, a rollercoaster Dubai spot market – see more on that below – we’ve been through a lot of ups and downs this month, rather like the markets as a whole.